The X & Y Generations, Down Payments, and the Current "Sweet Spot" of Buying a Home

Many articles are available online concerning the topics of our younger generation of home buyers, the current "sweet spot" of purchasing your home, and tips for saving up for your down payment.

The younger generation is showing great interest in buying homes, with recent sales at 30% first time home buyers. The main problem this generation faces is coming up with the down payment, which can be difficult even if you have already been saving. Taking out an FHA loan at 3.5% is one way to cut your down payment drastically, but this can still be a challenge for first time home buyers who may not have the income they want, or who have loans that they are paying on.

A poll showed that this generation is interested in buying a home, but they are putting it off. Interest rates will remain low until unemployment reaches 6.5%, which is estimated to happen in 2015.

With approximately two years remaining of low interest rates, housing supply is going down. Buying a house in a market with low supply will likely take longer to find a home, and due to frequent under appraisals it can take even longer to close on the home.

With this in mind, it is important that your savings will not only cover the down payment and closing costs, but additional hurdles such as numerous inspections and covering the difference if your potential house is under appraised. You will also want to have a safety net so you can comfortably pay your new mortgage.

Tips For Saving For Your Down Payment

• Evaluate how much you are spending on things you may not even use, such as movie channels, a forgotten gym membership, added cell phone features, etc. Cancel these useless charges and put the extra money towards your potential new home.
• Where is your money going? Using the free website Mint.com you can view your spending as it tracks it. It may be surprising to see that last month you spent $250 on weekend bar trips, a number you may have estimated to be much lower. By watching where you are spending your money, you will be more aware of areas that can be cut back, mainly in entertainment. $250 in bar/theater spending could be greatly reduced by hosting those same outings in your current home or apartment. 
• If you are looking to move it will mean a lot of packing and a lot of unpacking. Go through things that you already have, are these things you actually use? By selling items that you no longer use or have grown tired of you can declutter your living space all while making money!